Networks, Diversity, and Performance: The Social Capital of Corporate R&D Units

Paralleling debates in the social capital literature, existing theory is of two minds regarding the performance implications of demographic diversity. One view sees diversity as problematic for organizational teams because of the strains that plaqgue relationships across social divides. According to the second view, diverse teams are enriched through linkages between individuals with different skills, resources, and perspectives. This debate is usefully framed in terms of a team’s social network: do teams achieve a higher performance when the network among members connects diverse individuals or when ties are localized among members of the same demographic category? In this study, unique data on the social networks, organizational tenure, and performance of 223 corporate R&D units are analyzed to address this question. We find that, controlling for its tenure distribution, a team is less productive when its network remains concentrated among members of neighboring cohorts. In addition, we find that teams with more dense patterns of communication are more productive than units with more sparse structures.